Wrong Turn for Workers’ Rights: The US-Guatemala CAFTA Labor Arbitration Ruling – And What To Do About It

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On April 23, 2008, the AFL-CIO and six Guatemalan trade unions filed a complaint – known formally as a “public submission” – with the U.S. Department of Labor’s Office of Trade and Labor Affairs (OTLA) alleging that Guatemala was failing to effectively enforce its labor laws as required under Chapter 16 of the Dominican Republic - Central American Free Trade Agreement (DR-CAFTA). The complaint included five case studies where Guatemala failed to enforce its labor laws with regard to the right to freedom of association, to organize and to bargain collectively, as well as “acceptable conditions of work.” It also highlighted the troubling rise in anti-union violence since the passage of the trade deal.

On June 12, 2008, OTLA formally accepted the submission and began a six-month review process. As part of this process, the office reviewed additional documentation provided by the complainants and the Government of Guatemala, and conducted two visits where U.S. Government officials met with workers, union leaders, employers, government representatives and other organizations in Guatemala. On January 15, 2009, OTLA issued a public report finding “significant and systemic gaps” in Guatemala’s enforcement of its labor laws, including labor inspectors’ failure to obtain access to work sites and the failure to enforce court orders for reinstatement and payment of back wages. The public report did not, however, address the issue of violence against trade unionists, declining to argue that Guatemala’s failure to effectively investigate or prosecute violent crimes against trade unionists violated its obligations under Chapter 16 of the CAFTA.

The OTLA report did recommend a set of concrete steps Guatemala could take to address the violations but decided against formal consultation at that time. Instead, the office proposed an initial six-month period after which the U.S. would evaluate any progress made and determine next steps. During that period, Guatemala sent labor inspectors to three identified factories and resolved one dispute at a frozen vegetable processing plant to the satisfaction of the worker. However, another garment factory closed its doors without full payment to the workers, and in another factory some dismissed workers were reinstated only to face a new round of retaliation. These partial steps, which did nothing to address systemic concerns let alone provide an effective remedy for all the workers concerned, came close to persuading the U.S. to end the case. To keep it alive, unions submitted evidence of dozens of additional cases to the U.S. government.

In August 2011, after formal labor consultations between the two nations failed to yield results, the United States Trade Representative (USTR) filed for arbitration under the CAFTA dispute resolution chapter. This was the first time the United States ever brought a labor case to dispute settlement under a trade agreement. Shortly after this filing, USTR announced yet another delay while both governments negotiated a “labor enforcement plan,” which was not signed until April 2013. Guatemala failed to implement key components of the plan and, over a year later, on September 18, 2014, USTR announced it would restart the arbitration process.

The U.S. filed its first written materials on November 3, 2014, and the first hearing before the arbitration panel took place on June 2, 2015, in Guatemala City. Beset with numerous delays, including the resignation of one of the arbitrators in the middle of the case, the panel’s final decision was handed down on June 14, 2017 – nine years after the unions filed their submission.